Specialist input needed on COVID-19 relief for SMSFs
With the extension of the various COVID-19 relief this year, SMSFs will need to increasingly consider the use of a specialist to better navigate any risks and strategies for the fund across the next year, according to the SMSF Association.
SMSF Association CEO John Maroney said the various relief measures implemented by the federal government in the wake of the COVID-19 pandemic and extended into the 2021-22 financial year had highlighted the need for SMSF specialist advice.
“Managing an SMSF can be complex at the best of times, particularly for those who have just begun their journey towards a self-directed retirement.
“But the challenges of this pandemic have added another layer of complexity, so for SMSF members, especially those retired or approaching retirement, who are struggling with the COVID-induced changes, getting specialist advice is imperative.
“Such advice remains pertinent as the ATO has confirmed it will extend relief measures granted for the 2019-20 and 2020-21 financial years to this financial year,” he said.
To assist SMSFs, the association highlighted five key areas of relief that SMSFs should factor into this year’s superannuation reporting, which include rental relief, loan repayment relief, in-house asset relief along with minimum pension drawdowns and SMSF residency relief.
Mr Maroney noted that with property making up a significant part of many SMSF portfolios, rental relief is a serious consideration. The ATO decision also confirms SMSF landlords can continue providing rental relief, with the caveat that any reduction, waiver, or deferral of rent is only temporary and appropriate.
“On the issue of residency requirements, many Australians are still stranded overseas due to travel restrictions and disrupted air travel, so the ATO’s decision to waive the application of compliance resources in 2021-22 will be welcomed by affected SMSFs,” Mr Maroney explained.
“For LRBAs, the ATO has extended its relief to allow SMSFs to negotiate loan repayment adjustments. Breaches of the in-house asset rules will not attract compliance activity provided a written plan has been prepared to reduce the market value of those assets to below 5 per cent. In addition, the 50 per cent temporary reduction in the minimum drawdown requirements for account-based and market-linked pensions has been extended.
“These are all important measures that will help ease the stress on SMSFs, even as the pandemic hopefully recedes. We therefore urge SMSFs to consider using a specialist who will be able to determine the impact of COVID-19 on their fund and whether they are eligible to take advantage of the extended relief measures.
“Remember, too, the importance of having all the necessary documentary evidence to provide an auditor to support any relief claims made and to ensure there are no breaches of the ATO’s rules.”
Tony Zhang is a journalist at Accountants Daily, which is the leading source of news, strategy and educational content for professionals working in the accounting sector.
Since joining the Momentum Media team in 2020, Tony has written for a range of its publications including Lawyers Weekly, Adviser Innovation, ifa and SMSF Adviser. He has been full-time on Accountants Daily since September 2021.